MuniLand

Everyone in Washington is fighting over tax cuts, spending limits and the debt ceiling. But the real problem is the fat in all levels of government spending that must be slimmed down. A quick media survey uncovers poorly monitored and misspent government funds at every level of the system.

One of the most commonly reported spending issues is welfare fraud. When Massachusetts was sued to reach more citizens on welfare to get them registered to vote, 19,000 of the welfare recipients were not living at their listed addresses. The state, like most states, distributes welfare benefits electronically so that the benefits can be retrieved anywhere. If all these welfare recipients were illegally receiving support, that would be at least $138 million annually that Massachusetts has overspent. The Boston Herald had the story:

“The fact that 19,000 of these came back undeliverable tells me DTA has no idea where these people live, obviously, and is not doing the background checks they should be doing,” O’Connell said.

“It goes to show this program is just fraught with fraud and abuse and needs a complete overhaul,” said O’Connell, who has made her name on Beacon Hill as a leading legislator for welfare reform.

It was not clear last night how many of the missing clients have moved out of state or are otherwise no longer eligible to receive Massachusetts benefits.

Regardless of the outcome of the negotiations between President Obama and Congress, the government’s budget is seriously out of balance. Here is a fiscal picture for the federal government from February in a simple form:

* U.S. Tax revenue: $2,170,000,000,000

* Fed budget: $3,820,000,000,000

* New debt: $1,650,000,000,000

* National debt: $14,271,000,000,000

* Recent budget cuts: $38,500,000,000

Let’s remove eight zeros from these figures and pretend it’s a household budget:

* Annual family income: $21,700

* Money the family spent: $38,200

* New debt on the credit card: $16,500

* Outstanding balance on the credit card: $142,710

* Total budget cuts so far: $38.50

The only brake on the spending of the federal government is the debt ceiling. Congress has been willing over and over to raise the limit on the amount of debt issued by the U.S. Treasury. This debt is transferred to the Federal Reserve, which sells it to financial markets, but it has been buying it back as part of its quantitative easing program. Unless Congress finds some fiscal discipline, this process will likely continue for decades, or until some external shock or technology development drives real productivity and growth.